Quiz 1: Final period

1 In line with your audit if Brown In, financial statements the company accountant presented to you the balance sheet that fo
accounting records and books thereon. You discovered that books of accouts are in agreement and balance sheet as pre
Brown Inc.
Balance Sheet
as of December 31, 2020

ASSETS
Cash ₱80,000.00
Accounts Receivable 160,000.00
Notes Receivables 48,000.00
Inventories 400,000.00
Total ₱688,000.00

LIABILITIES & OWNERS' EQUITY

Accounts Payable 32,000.00
Notes Payable 64,000.00
Capital Stock 160,000.00
Retained Earnings 432,000.00
Total ₱688,000.00

Further review and investigation of the company's books revealed the following omissions and errors which were no

2017
Deferred Expenses ₱14,400.00
Deferred Income
Accrued Expenses 3,200.00
Accrued Income
Ending Inventory - Overstated
Ending Inventory - Understated 96,000.00

No Dividends declared during the years and no adjustments were made to retained earnings. The company's books

Year 2017
Net Income ₱120,000.00

Compute:
a Correct Net Income (loss) in 2017 - lagyan ng parenthesis pag loss 227,000.00
b Correct Net Income (loss) in 2018 - lagyan ng parenthesis pag loss (125,600.00)
c Correct Net Income (loss) in 2019 - lagyan ng parenthesis pag loss 88,800.00
d Correct Net Income (loss) in 2020 - lagyan ng parenthesis pag loss 392,000.00
e Net credit (debit) Adjustment to Retained Earnings as of January 2020 - lagyan ng (121,600.00)
parenthesis pag debit adjustment
f correct retained earnings as of December 31. 2020 582,400.00

2 Soya Company provided th following shareholders' equity on December 31, 2020

Preference share capital, 12% P100 par ₱2,000,000.00

Ordinary share capital, P50 par 4,000,000.00
Share Premium 3,000,000.00
 Retained Earnings 1,500,000.00

Dividends have been paid on the preference shares up to December 31, 2017

Compute
PS
a Cumulative and fully participating 191.00
b Cumulative and fully participating after ordinary share receives 15% 189.00
c Cumulative and fully participating up to 16% 183.67
d Cumulative and nonparticipating 136.00
e Noncumulative and nonparticipating 112.00

3 Hello Company had the following ordinary shares transactions during the current year

01.01.2020 Outstanding 30,000

04.01.2020 New shares issued 10,000
06.01.2020 TS acquired 12,000
12.01.2020 TS resold 6,000

The entity had 100,000 cumulative preference shares outstanding during the year. The preference shares has a par
 The entity sustained a net loss of P3,500,000.00 for the current year.

Compute
a Average ordinary shares (no decimal) (no peso sign) 31,000
b basic loss per share 112.90

4 Hold Company had the following ordinary shares transactions during the current year

01.01.2020 Outstanding 30,000

05.01.2020 New shares issued 10,000
08.01.2020 Split up 2-2
12.01.2020 TS acquired 15,000

The entity had 100,000 cumulative preference shares outstanding during the year. The preference shares has a par

The entity sustained a net income of P3,900,000.00 for the current year.

Compute
a Average ordinary shares (no decimal) (no peso sign) 65,000
b basic earnings per share 60.00

5 The following are data for MAMA Company

You have discovered that the merchandise inventory at the end of each year were understated by P100,000 and P200,00
In addition, in inspecting the records of the company, you discovered some items that had improperly recorded and the ce
overlooked in 2007 and 2008. These omissions and other errors for each year are summarized as follows:
12-31-2019
Accrued Salaries 873,600.00
Accrued Interest Income 259,200.00
Prepaid Insurance 384,000.00
Advances from customers 470,400.00
(collections from customers had been recorded as sales but should have been
recognized as advances from customers because goods were not shipped until the
following year)
Machinery 564,000.00
(capital expenditures had been recorded as repairs but should have charged to
machinery; the depreciation rate is 10% per year, but the depreciation in the year
of expenditure is to be recognized at 5%

Compute
a What is the total effect of the errors on the 2019 net income - lagyan parenthesis (65,000.00)
pag overstated
b What is the total effect of the errors on the 2020 net income - lagyan parenthesis 420,100.00
pag overstated
c Total effect of errors on retained earnings at 01-01-2020 (lagyan parenthesis pag (65,000.00)
overstated)
d Total effect of errors on retained earnings at 12-31-2020 (lagyan parenthesis pag 355,100.00
overstated)
e What is the effect of 2019 errors in 2020 income statement (lagyan parenthesis 544,400.00
pag overstated)
f Total effect of errors on company's working capital at 12-31-2020 (lagyan (620,200.00)
parenthesis pag overstated)
g An adjusting entry to correct the amount of machinery for 12-31-2019 includes a 535,000.00
credit to retained earnings of how much?
u the balance sheet that follows. You reviewed the client's
and balance sheet as presented as follows

and errors which were not corrected during the years of errors.

2018 2019 2020

₱11,200.00 ₱8,000.00 ₱9,600.00
6,400.00 4,800.00
1,200.00 1,600.00 800.00
2,000.00 2,400.00
112,000.00 128,000.00
144,000.00

gs. The company's books reported the following net income:

2018 2019 2020

₱88,000.00 ₱104,000.00 ₱120,000.00

a. Cumulative and fully participating

Share Capital
Dividends
 Excess
Total
Divided by outstanding shares
Book value Per share

OS
83.50 b. Cumulative and fully participating after ordinary share receives 1
84.00
85.33 Share Capital
97.25 Dividends
103.25 Excess
Total
Divided by outstanding shares
Book value Per share

c. Cumulative and fully participating up to 16%

Share Capital
12% Dividends
4% Dividends
Excess
Total
Divided by outstanding shares
Book value Per share

d. Cumulative and nonparticipating

Share Capital
Dividends
Excess
Total
Divided by outstanding shares
Book value Per share

e. Cumulative and nonparticipating

Share Capital
Dividends
Excess
Total
Divided by outstanding shares
Book value Per share

01.01.2020 Outstanding
04.01.2020 New shares issued
06.01.2020 TS acquired
12.01.2020 TS resold

eference shares has a par value of P50 and 10% dividend rate.
 01.01.2020 Outstanding
05.01.2020 New shares issued
08.01.2020 Split up 2-2
09.01.2020 TS acquired

eference shares has a par value of P50 and 10% dividend rate.

by P100,000 and P200,000 in 2019 and 2020.

operly recorded and the certain year-end adjustments had been
as follows:
12-31-2020
780,000.00
213,000.00
307,800.00
561,000.00

522,000.00
PS OS Total
₱2,000,000.00 ₱4,000,000.00 ₱6,000,000.00
720,000.00 480,000.00 1,200,000.00
 1,100,000.00 2,200,000.00 3,300,000.00
₱3,820,000.00 ₱6,680,000.00 ₱10,500,000.00
20,000.00 80,000.00
₱191.00 ₱83.50

ng after ordinary share receives 15%

PS OS Total
₱2,000,000.00 ₱4,000,000.00 ₱6,000,000.00
720,000.00 600,000.00 1,320,000.00
1,060,000.00 2,120,000.00 3,180,000.00
₱3,780,000.00 ₱6,720,000.00 ₱10,500,000.00
20,000.00 80,000.00
₱189.00 ₱84.00

ng up to 16%
PS OS Total
₱2,000,000.00 ₱4,000,000.00 ₱6,000,000.00
480,000.00 600,000.00 1,080,000.00
80,000.00 80,000.00
1,113,333.33 2,226,666.67 3,340,000.00
₱3,673,333.33 ₱6,826,666.67 ₱10,500,000.00
20,000.00 80,000.00
₱183.67 ₱85.33

PS OS Total
₱2,000,000.00 ₱4,000,000.00 ₱6,000,000.00
720,000.00 720,000.00
3,780,000.00 3,780,000.00
₱2,720,000.00 ₱7,780,000.00 ₱10,500,000.00
20,000.00 80,000.00
₱136.00 ₱97.25

PS OS Total
₱2,000,000.00 ₱4,000,000.00 ₱6,000,000.00
240,000.00 240,000.00
4,260,000.00 4,260,000.00
₱2,240,000.00 ₱8,260,000.00 ₱10,500,000.00
20,000.00 80,000.00
₱112.00 ₱103.25

Running balance Months Average

30,000 30,000.00 0.25 7,500
10,000 40,000.00 0.17 6,667
12,000 28,000.00 0.50 14,000
6,000 34,000.00 0.08 2,833
31,000.00
 Running balance Months Average
60,000 60,000.00 0.33 20,000
20,000 80,000.00 0.33 26,667
0
25,000 55,000.00 0.33 18,333
65,000.00